The directive of prompt corrective action means that
A) the FDIC will intervene earlier and more vigorously when a bank gets into trouble.
B) the banks must take actions quickly to resolve reserve disputes.
C) bank failures cannot occur.
D) there must be an immediate response to an increase in interest rates.
A
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Answer the next question on the basis of the following consolidated balance sheet of the commercial banking system. Assume that the reserve requirement is 20%. All figures are in billions.Assets (billions of dollars)Liabilities & Net Worth (billions of dollars)Reserves$200Checkable deposits$1000Securities300Stock shares400Loans500 Property400 If the Fed reduced the reserve requirement from 20% to 16%, excess reserves in the commercial banking system would increase by ________ and the monetary multiplier would rise to ________.
A. $40 billion; 6.25 B. $10 billion; 5 C. $40 billion; 12.5 D. $10 billion; 10
The supply curve is upward-sloping (i.e., it takes a higher price to induce greater production) because of
A. Increasing fixed costs. B. Increasing marginal costs. C. Increasing total costs. D. The decreasing skill level of additional workers.
Which of the following statements about the principles of economics is? false?
A. An investor selecting and investing in a stock or a combination of stocks that always earns him? 15% returns on his investment is an example of optimization. B. Based on the sales of last three? years, a shopkeeper infers that the higher the discount offered on goods the higher will be its demand. This is an example of empiricism. C. Five mobile operators selling mobile phones at the same price in a city is an example of equilibrium. D. A chess player selecting his best moves to win the chess tournament is an example of optimization.
The Federal Reserve Banks are bankers’ banks. Explain.
What will be an ideal response?